Using a Power of Attorney

In the event a buyer or seller cannot attend a real estate settlement, a Power of Attorney (POA) can be used to have closing documents signed on their behalf. In the State of Maryland it is suggested that you use a statutory POA form when such a power is needed.

The buyer or the seller is the Principal; the one giving the power to the Attorney in Fact, or person signing on their behalf. It’s important to have the Principal read the form completely and consult an attorney if there are any questions. By giving someone the power to sign on their behalf, the Principal is giving them the power to make certain decisions for them. This is a decision that needs to be thought over after all alternative methods have been explored first. Ask the closing agent about sending documents by overnight delivery directly to the Principal. This way they can sign their own documents and return them by overnight delivery to the closing agent. This results in an acceptable delay to the closing, usually one day. Often the closing agent can send documents by email if preferred. Once printed and signed, the originals are then returned to the closing agent by overnight delivery.

The POA should be specific to the property involved. It should state the address of the property and the legal description, if available. The document should spell out the specific powers given by the Principal. Different powers are given to the attorney in fact, depending on if it is to be used for a seller or a buyer. The language used often becomes an issue at the closing. If the POA is to be used by the buyer, there should be specific language it the document that authorizes the attorney in fact to sign documents provided to them by the closing agent. This would include notes, deeds of trust, settlement statements, contact addendum, recording forms and all lender provided documents. If the POA is to be used by a seller the POA must allow the attorney in fact to sign a deed and all other closing documents presented by the closing agent. These seller specific powers must be given to the attorney-in-fact in the POA along with the power to sign settlement statements, recording forms, contract addendum and any lender documents.

When signing a POA, the Principal’s signature must be notarized by a notary at the time and place it is signed. A local notary in any state of the U.S. is acceptable. If notarized in a foreign country, the signature must be notarized by a United States Officer. This usually means a visit to the US embassy or a consulate. If the Principal is in the military, the POA can be notarized by a military officer. Another alternative is to have the local, foreign notary certified by a judge of the highest court in the jurisdiction where the notary is located. This may require local assistance. The Principal’s signature on the POA must be witnessed by two individuals, this is state law. One witness may be the notary.

Additional issues may include the date the POA was signed. It should be recent, which means it should be signed and notarized within the last year. It also must be durable, meaning it should have language stating that the power will not terminate in the event the principal is disabled. It should also have a termination date.

The original must be presented to the closing agent at the closing. It must be recorded in the land records along with the deed or the deed of trust, depending on how it was used. This means the Principal will be without the original for several months. A problem can arise if a broad or general POA is used that gives the Principal additional powers. It may not be available to the Principal for the time period needed to record it and have it returned to the closing agent.

It general all parties that are contemplating the need to use a POA should be in contact with your closing agent as soon as you realize that one is needed. Most settlement offices can provide the forms and advice needed to have this done so the closing can be completed without delay.

Mike’s takeaway;

Make the effort to have original signatures on all closing documents and when a POA is needed, be in touch with the closing agent early in the process.